Tax Day was Monday, and nearly two-thirds of respondents to this week’s RBJ Daily Report Snap Poll say they believe the amount of federal income tax they personally pay is unfairly high.
While 63 percent say their share of the tax burden is too high, 32 percent say it’s about right. Only 5 percent say the amount they pay in federal income tax is too low.
The first U.S. income tax was levied during the Civil War, but it was repealed after 10 years. Since ratification of the 16th Amendment in February 1913, Americans have faced an annual federal income tax deadline.
While the federal income tax is designed be progressive, taking a larger percentage from higher-income individuals than it does from those with lower incomes, the fairness of the distribution of the tax burden has long been debated.
A July 2012 report by the Congressional Budget Office provided this breakdown of average before-tax household income in 2009: lowest quintile, 5.1 percent; middle quintile, 14.7 percent; and highest quintile, 50.8 percent.
In 2009, the shares of federal taxes paid by households in the same quintiles were: lowest quintile, 0.3 percent; middle quintile, 9.4 percent; and highest quintile, 67.9 percent.
The overall average federal tax rate of 17.4 percent in 2009 was the lowest in the 1979-2009 period. The average for that period was 21 percent.
Roughly 700 readers participated in this week’s poll, conducted April 15 and 16.
In terms of fairness, is the amount of federal income tax you personally pay too high, about right or too low?
Too high: 63%
About right: 32%
Too low: 5%
I don't think taxes are too high; it's the manner in which they're spent that concerns me. Reasonable and responsible spending equates to reasonable tax rates.
This is the best country in the world. We have lower taxes and have more security and a better lifestyle than in Europe and Canada. No need to increase taxes, but we cannot risk lowering them, and then start having the problems of the third world that has low taxes and terrible infrastructure and high crime. I'd say we have the “Goldilocks” tax level.
—Sergio Ruffolo, JR Language Translation Services Inc.
The published tax rates do not tell the whole story. When you add in what the average American pays in "hidden" federal taxes and fees (gasoline, energy, communication, etc.), the real rate is almost doubled. And even that is not enough; they still want more! Federal employees earn on average double what average private-sector workers do. There is something terribly wrong when public servants earn more than those they serve.
—George Thomas, Ogden
The tax burden is ridiculous. If Obama and Gov. Cuomo want to improve the federal and state economy, they need to take an economics lesson from the legendary economist Milt Friedman. By reducing taxes on individuals and businesses there will be a multiplier effect of higher tax revenue due to the unleashing of the private sector. The key to a vibrant economy is putting more resources in the hands of the private sector and less in the hands of government. Unfortunately, President Barack Obama and Gov. Andrew Cuomo are disciples of failed left-wing Keynesian economics. Obama has gone so far over the edge in spending even John Maynard Keynes would turn over in his grave. Obama and Cuomo are examples of failed economic policies and should get a refresher course of basic economics.
—John Rynne, president, Rynne, Murphy and Associates Inc.
People with income, especially if unearned (like pension, savings, etc.), should pay no tax on such income up to $25,000. The 2009 shares were much closer to being fair.
—Ann Law, Law Consulting
I'm fine with how much I pay. I'm not fine with how my tax dollars are used. Illegal wars, the militarization of local police agencies and corporate subsidies are not what our tax dollars should be used for.
I feel that to gain equality in tax burdens, we should all pay a flat tax of 9%.
—Frank Muto, president, FJM Inc.
AMT is a real problem that needs to be addressed.
The discussion should be about the total overall percentage of income that goes to taxes, fees and surcharges. Fed tax, state tax, property tax, school tax, sales tax, mortgage recording tax, social security tax, Medicare tax, gas tax, tobacco tax, tax on liquor, surcharges on insuring a vehicle, surcharges on registering the family dog, taxes on cell phone usage. Adding all this together, the percentage becomes very high, very fast. Just looking at federal tax paid doesn't provide the whole picture, especially for us in New York who pay some of the highest property taxes in the country for assessed value.
It's a simplistic question because the issue is more complicated. I think my taxes are fair compared with the majority of taxpayers, but is unfairly high compared with the richest people. My main complaint is the payroll tax rate compared to the investment tax rate. I believe they should be the same rate. Why should a millionaire who has no salary pay 15 percent on his income while I, who have far less income from payroll, pay 25 percent?
—Donald Dinero, TWI Learning Partnership
When I see the parade of young, healthy individuals streaming in to the old Marine Midland building to sign up for government handouts, talking on their iPhones getting last-minute pointers on working the "system," I know that I am paying too much. Our welfare state is a disgrace.
—Tom Peters, Rochester
I don't so much have a problem with the tax rates as they are; what I care more about is how the money is spent as there is a ton a waste.
Why not talk about total taxes, not just federal income tax? Make up the list of federal taxes embedded in all sorts of goods and services ranging from gasoline, electricity, natural gas, cell phones, etc. We're clearly overtaxed but these other taxes/fees are hidden and not discussed.
—Keith B. Robinson, Diamond Packaging
It is time to scrap the entire tax system. It punishes achievement and encourages mediocrity. The "fair share" that is so often spoken about today needs to also focus on the almost 50 percent of our population that pays no federal tax. Everyone needs to be part of this to avoid the current class warfare debate and focus on rebuilding our nation. A flat tax has proved very successful in many countries. A consumption tax could also be explored. We should seriously look at both rather than to immediately demagogue it out of hand.
—Todd Baker, Henrietta
Smoke and mirrors once again. Of course I pay too much federal tax. And state tax and county tax and town tax and property tax and school tax and gas tax and fees and registrations. Eisenhower spoke of the vast military industrial complex, well, we now have a version of the government industrial complex. The money it costs to feed the beast of government is insane. Including pay, benefits and pensions. This is before we even get to waste. Redundant departments, double-dipping public servants, and just plain incompetence at the taxpayer expense. The question should have a second part to it: Do you feel like you get value for your confiscated tax dollars? I would exempt some educators, police and fire professionals. It's plain and simple, the cost of government is too much. Half of the departments in Washington could be done away with and it would never touch your life. How many "security agencies" alone are there? There are many federal "programs" that could go away and you would never even know it. These are fully staffed departments with office space, equipment, travel accounts, department heads, assistant to the department head, assistant to the assistant, support for the assistant’s assistant, benefits and pensions. How about flushing the TSA, HUD, education, Homeland Security, Fannie and Freddie, just for starters? Imagine having a Jack Welch or Lee Iacocca as president. That would be a stunning contrast to what we currently have.
Federal and state income taxes are the most inefficient use of capital in the entire economy. Government has seriously encroached on areas of economic life and personal freedom far beyond what the constitution allows. The resultant spending and taxation to support that government imposed activity is why taxes are too high. On the other hand, if one likes that level of socialistic control on their lives, Europe is open to immigration.
—Jim Weisbeck, Bloomfield
No. Not for services rendered.
Our governments—federal, state and local—spend way too much money. Pet projects, roads to nowhere and silly contracts with guaranteed raises for employees that are out of touch with growth rates of the economy are a waste of resources. We need to scale back on social spending, yes it is important to help the less fortunate, but these programs were designed to be TEMPORARY, we have created generations that are tied to these temporary assistance programs. That need to change. I know it isn't a tax-rate issue, but that is where a lot of our spending goes.
I pay about 25 percent total taxes, including self-employment, New York State and federal. I run a small company. I fund my retirement account for the future and for the deduction. In any other civilized country, the rate would be higher. So, yes, I believe we pay our fair share. Not too much. Given our fiscal disorder, it is probably too little. But I won't be sending any extra in, mostly because I can't afford it.
—Jon Wilder, H & W Technology LLC
For those of us who live in New York State, the problem isn't the federal tax. Our problem is the bloated state government and authorities that extract way, way too much. So much, in fact, that New York is no longer competitive with any state.
—Jerry Lighthouse, C.P.M., CPIM Advanced Purchasing Technology LLC
We must simplify the tax code per Simpson-Bowles Commission AND raise the revenue percentage to 20 percent.
—Mike Bleeg, Strategic Results
Paying income tax on Social Security is a pain! New York has it right on Social Security!
—Tom Zimmerman, Z2 Architecture PLLC, Canandaigua
In making a judgment about tax fairness, it is essential to look at regressive taxes relating to local and state taxes, especially sales, use and real property taxes.
—Nathan J. Robfogel
The poor and middle class pay too much tax. The very rich and corporations do not pay their fair share.
—C. Lewis, Fairport
Our current federal income tax system has become a spider’s web of deductions, loopholes, exemptions, exceptions, etc. It should be replaced by a flat tax, which would apply to all income levels of individual income and investment profits. Eliminate estate taxes.
—Tom Shea, Thomas P. Shea Agency Inc.
People always squawk about taxes being too high but how else are we going to pay for what we need in this country. I think most people would be feeling better about what they paid if it was being put to good use. But to see it squandered on things that are not for the good of the country but are more self supporting to the elected officials themselves and being sent to foreign countries that badmouth the U.S.A., and all we stand for really begs the question: "Is anyone paying attention in Washington?" Add to that the waste in Washington, and no one seemingly minding the store it is no wonder we all squawk.
My taxes are reasonable as a contributing member of American society. What is unreasonable is the wasteful spending and mismanagement by our elected officials and their appointee’s.
4/19/13 (c) 2013 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email firstname.lastname@example.org.